What are the legal consequences of not paying credit card debt?

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A credit card company may sue any person who fails to pay off credit card debt. If the company wins a money judgment, it collects the amount due from the defendant's income and property. These consequences apply to people or institutions that are personally liable for the debt and their personal guarantors, according to Nolo.

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Typically, a creditor attempts to collect credit card debt for several months before appointing a collection agency or attorney to initiate the legal process. If the attorney assesses that the debtor has sufficient property or income to pay off the debt, he sues for valuable personal or business assets. The credit card company may collect 25 percent of the debtor's personal income until the debt is settled, claims Nolo.

If the credit card company ascertains that the debtor does not have sufficient assets to pay off the debt, it may write off the debt and treat it as a business loss. In such a case, the debt becomes legally uncollectable in five or six years, depending on the limitations imposed by each state, states Nolo. Debt forgiveness negatively impacts the credit score of the debtor. The credit card company may also sell the debt to a collector who pursues the debtor aggressively, warns Nolo.